Crude oil prices rally takes a breather ahead of Fed, ECB rate hikes Oil prices eased on Monday as traders await more rate hike cues from U.S. and European central banks, with tightening supply and hopes for Chinese stimulus underpinning Brent at $80 a barrel. Brent crude futures dipped 41 cents, or 0.5%, to $80.66 a barrel by 0045 GMT. U.S. West Texas Intermediate crude was at $76.70 a barrel, down 37 cents, or 0.5%. The benchmarks rose 1.5% and 2.2% respectively last week, their fourth straight of week of gain, as supply is expected to tighten following OPEC+ cuts. Fighting also escalated last week in Ukraine after Russia withdrew from a U.N.-brokered safe sea corridor agreement for grains exports. Investors have priced in quarter-point hikes from the Federal Reserve and European Central Bank this week so the focus will be on what Fed Chair Jerome Powell and ECB President Christine Lagarde say about future rate hikes. Rising interest rates have dampened investments and strengthened the greenback, making dollar-denominated commodities more expensive for holders of other currencies. Market participants also expect Beijing to implement targeted stimulus measures to support its flagging economy, likely boosting oil demand in the world’s No. 2 consumer. On supply, United Arab Emirates Energy Minister Suhail al-Mazrouei said on Friday that actions by OPEC+ to support the oil market are sufficient for now and the group is “only a phone call away” if any further steps are needed. Last week, U.S. energy firms made their deepest oil rig cut since early June, with operating units down by seven to 530, energy services firm Baker Hughes said on Friday.
Retail inflation in milk was reported at 8.85% in May 2023. The milk inflation has remained elevated at over 6% since August 2022. Despite India being the largest milk producer since 1998, the commodity has been the second biggest factor after cereals such as rice and wheat in driving up retail inflation in the last fiscal.
Milk has the second highest weight in the food and beverages basket of the consumer price index at 6.61%, a notch lower than cereals and products with a 9.67% weight. Organised players, including Mother Dairy and Amul, hiked prices multiple times in the last one year citing higher fodder cost, robust demand and some impact due to reports of lumpy skin disease.
Industry sources said feed cost, which has a share of more than 65% in the cost of production of milk, has increased to Rs 20/kg from Rs 8 a year ago. The finance ministry in April had attributed the elevated milk inflation to a demand supply mismatch and said it could be one of the factors apart from volatile international crude oil prices and constrained supplies of milk would influence the country’s inflation trajectory.
“Milk production has been impacted by a lumpy skin disease infecting millions of cattle in late 2022,” the ministry said in the monthly economic review, adding that the vaccination drive against the disease is expected to curb the spread and immune the cattle against the skin disease.
According to official data, currently India is the world’s largest milk producer, and has a share of 23% in global milk production. For the first time in decades, the country’s milk production is likely to have stagnated in 2022-23 due to Lumpy Skin Disease in cattle across several states and the lagged effect of Covid-19 in the form of stunting of the animals, a senior official with department of animal husbandry and dairying recently had stated. The milk production was estimated at 221 million tonne in 2021-22.